Amazon.com Inc (NASDAQ:AMZN, ETR:AMZ) has room for margin upside in 2024, with Prime video ads providing nice boost, according to Bank of America analysts.
In an update to clients, the analysts noted that Amazon could see up to $5 billion in incremental revenue potential from new subscription and ad revenue for Prime Video, contributing 370 basis points to 2023 North America margins.
They also stated that ad partnerships with social media platforms could increase return on investments (ROIs) on ad spend, leading to incremental gross merchandise volume (GMV) growth.
Analysts at Bank of America believe Amazon's North America retail margins still have significant room to grow with potential to reach 7% based on Amazon's commentary and their advertising estimates, well above Street estimates of 5.7% in 2025.
They maintained their ‘Buy’ rating on the stock with a price objective of $168 per share.
Shares of Amazon were flat at $149.53 in early afternoon trading on Wednesday.